Overview

A nail-biting week for emerging markets. As fears mounted that Argentina might default on its $128 billion debt, lenders demanded higher interest rates not only from Argentina, but from all emerging economies. Argentine shares plunged by 12% to a three-year low. Share prices fell by 21% in Turkey, another troubled debtor. Several currencies fell to record lows, including the Brazilian real, the Chilean peso and the Venezuelan peso; so did the Turkish lira, the Polish zloty and the South African rand.

The 12-month rate of growth in Brazil's industrial production slowed to 4.2% in May, well below its level in March. But that is still brisk when compared with several East Asian economies. New figures have confirmed that Singapore is in recession. Its GDP fell at an annual rate of 10.1% in the second quarter, after a decline of 11.3% in the first quarter; output was 0.8% lower than a year ago.